Reports this morning (see here and here) indicate that the trouble brewing in European rugby is coming close to boiling point as the bodies representing English Premiership clubs (PRL) and those of the French Top 14 clubs (LNR) have re-iterated their intention to commence a new ‘European’ competition in season 2014-2015. They have given the ‘Celtic’ nations six weeks to decide if they wish to be part of it.

The beef of the English and French clubs with the current Heineken Cup (HC) is with the structure of the competition, especially how many clubs from each country can qualify for the pool stage and how revenues are divided among the participating unions. Currently, the 24 pool-stage places are allocated on a country basis with 22 places based on relevant league performance (6 English, 6 French, 3 Irish, 3 Welsh, 2 Scottish and 2 Italian). The remaining two places are given to the winners of the previous season’s Heineken Cup and Amlin Challenge Cup (ACC) (if the latter two have already qualified, their spot is given to the next best-placed team from their own country. This is how Connaught has qualified in recent years). The argument of the French and English clubs is that this gives the Rabo 12 League a dis-proportionate number of clubs. It also gives the Rabo 12, through its four rugby unions, majority voting power. Under the current system, revenues from HC are split as follows: Rabo 12 52%, English and French 24% each. Unless changes are made to the current system, the French and English clubs will leave the current ERC-run HC competition at the end of this season.

Both PRL and LNR propose a 20-team competition with the top 6 teams from each league qualifying automatically, with the winners of previous HC and ACC getting the remaining two spots. Revenues would be equally split between the three leagues.

How will the ‘Celtic’ nations react? Some of their clubs will undoubtedly be worse off if the ERC agree to the changes proposed by the English and French clubs. However, if the ERC refuse to accommodate the Anglo-French alliance and a new competitor is set-up, then all remaining ERC clubs will almost certainly be worse off. A HC without any English or French clubs would not be as popular, both in terms of paying spectators and TV viewers, as it will effectively mimic the current Rabo 12. On the other hand, a new Anglo-French competition may also struggle without the presence of, particularly, the Irish and Welsh clubs.

As well as that, not only would demand for such new competitions be likely to be lower, competitive balance may also suffer as well. Munster, Leinster and the Ospreys (Wales) have dominated the Rabo 12 in the last six seasons even though these clubs do not often play full-strength teams as the current HC is their priority and many players are often missing on international duty. A HC without French and English teams would likely be dominated by Irish teams, particularly if they are regularly at full-strength.In any new Anglo-French league, recent experience suggests that such a league will be dominated by French clubs who look like they will dominate the current HC for the next number of seasons. This is a consequence of large investment in teams by rich owners which has been facilitated by a salary cap well in excess of that in operation in the English Premiership. The French salary cap for this season is €10m while the English cap is £4.5m (approx €5.35m at current exchange rate). Without levelling the playing field, it is difficult to see many English teams doing well in such a proposed league, especially with the influx of top Southern Hemisphere players to France continuing. The worry for the IRFU must be that more Irish players will follow Johnny Sexton to France as it will find it more difficult to generate sufficient revenue to compete with higher wages paid in France. As well as that, investment in academies to develop promising young Irish players will surely be affected, leaving the Irish national team worse off in the future.The question must be asked as to whether this threat by the English and French clubs is credible and whether it is a sufficient bargaining tool to induce changes in the current HC structure. One way in which the French and English clubs have signalled how credible their threat is by already having agreed a deal with BT Sport to televise games from their proposed European competition. The ERC have already signed a contract with Sky for the HC over the next few seasons. It is unlikely that Sky will be happy with a HC that does not include English teams.